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Millions struggling to pay council tax and other essential bills, finds study

Poverty is rising for all groups - even those in work – according to a new financial inclusion monitor report.

Research from the University of Birmingham and the University of Lincoln shows nearly 1.6 million people falling behind with council tax payments, with six in ten people in the poorest fifth of the population reporting they are in problem debt – mainly council tax payments, rent or utility bills. 

Nearly 1 million people are behind with their rent, while over a 1 million people are behind on water bills.

The 2019 Briefing, found that nearly 2.2 million people report having been contacted by bailiffs and nearly one million experiencing bailiffs breaking the rules.

A growing number of personal insolvencies were also highlighted, with over 70,000 Individual Voluntary Arrangements (formal alternative to bankruptcy) made in 2018, up from 40,000 in 2015.

Karen Rowlingson, Professor of Social Policy and Deputy Director of the Centre on Household Assets and Savings Management (CHASM) at the University of Birmingham and co-author of the report, said: “The government is saying that austerity is over but our research shows that millions of people are still struggling to pay essential bills.

“Much more needs to be done to increase income levels to help people make ends meet.”

The report also finds that the number of people without a bank account has reached an all-time low of just over one million people.

And some financial institutions are making particularly strong efforts to provide basic bank accounts, including the Co-operative Bank. But others are doing relatively little.

And, overall, banks are making  an estimated £2.4bn in revenue from unarranged overdrafts with people in deprived areas are more likely than others to pay these fees.

Other key findings include:

  • The rapid growth in zero hour contracts, witnessed since 2012, has now stabilised at nearly one million people in 2018,
  • While the growth in employment is very welcome, average weekly real earnings have still not quite recovered to their pre-financial crash levels.
  • Workers in four types of industry have particularly high rates of poverty: accommodation and food services; agriculture, forestry and fishing; administrative and support services; and wholesale and retail.
  • The UK’s household savings rate is lower than the EU average and far lower than many of our largest and closest Western European neighbours.
  • The last four years have seen a dramatic rise in the number of people with an active private sector pension, from 2.8 million in 2013 to 8.8 million in 2017.
  • From April 2019, the minimum contributions to workplace pensions increased from 5% to 8% (2% to 3% for employers and 3% to 5% for employees).
  • Only 6 in 10 working-age adults had home contents insurance in 2017/18. 

Steve McKay, Distinguished Professor in Social Research from the University of Lincoln and a co-author of the report said: “The record on jobs remains very positive, but despite growing numbers in paid work many families remain poor.

“This is our last report before a likely Brexit. Any return to harsher economic conditions risks worsening such trends”.

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